Macro Quiz
For a given population and a given quantity of labor employed, what will happen to aggregate production and income per capita if there is an increase in a nation's capital stock?
Aggregate production will increase, and income per capita will increase.
Which of the following will cause a movement from point X to point Y along the short-run Phillips curve (SRPC)(SRPC) that is shown in the graph above?
An increase in government spending
Country X's economy is in recession. Which of the following combinations of fiscal and monetary policy actions would move the economy toward full employment in the short run?
An increase in government spending and a decrease in the required reserve ratio
Which of the following causes economic growth?
An increase in labor productivity
Suppose that in 2017 government outlays exceeded tax revenues. An increase in government purchases in 2018, with no other budgetary changes, would lead to which of the following from 2017 to 2018 ?
An increase in the government budget deficit
Which conclusion can be supported by the data in the table above?
Country Y's real GDPGDP per capita is greater than Country X's real GDPGDP per capita.
If an economy is in long-run equilibrium, which of the following combinations of policy actions will result in inflation?
Increasing the money supply and increasing government spending
Country X's economy is currently at full employment. Assume Country X's central bank increases the money supply by 2 percent over a prolonged period. According to the quantity theory of money, which of the following will happen in the long run for a given velocity of money?
Nominal output will increase by 2%.
If the actual inflation rate is less than the expected inflation rate, which of the following must be true?
Potential real output exceeds equilibrium real output.
Assume members of the Organization of the Petroleum Exporting Countries (OPEC) agree to a coordinated increase in oil production. If the economy is at equilibrium at point B, what effect will this have on the Phillips curve model in the long run?
The SRPC will shift to the left.
An economy is in long-run equilibrium. If the central bank reduces the growth rate of the money supply, which of the following must occur in the long run?
The rate of inflation will decrease.
An increase in government spending financed by borrowing will result in which of the following?
The rate of physical capital accumulation will decrease in the long run.
Based on the table above, what will happen to the real interest rate in the loanable funds market and private investment spending in plant and equipment?
The real interest rate will increase, and private investment spending will decrease.
The national debt is equal to which of the following?
The sum of all past government budget deficits and surpluses
According to the quantity theory of money, if the money supply is $40 billion, real output is $100 billion, and the price level is 1.2, what is the velocity of money?
3.0
Given the situation illustrated in the graph and holding all other influences constant, which of the following policies will restore the macroeconomic equilibrium to full employment?
A contractionary fiscal policy and a contractionary monetary policy
If the total of government spending plus government transfer payments is less than tax revenues, which of the following must be true?
The government budget is in surplus.
The table below provides the values, in billions of dollars, of selected macroeconomic variables for a nation at the current real interest rate. The nation is a closed economy with no international transactions. Based on the table above, which of the following is most likely true?
The government is borrowing.
